Tuesday, February 2, 2016

Unconfirmed Rumors Department: Will Sanofi And Merck Part Ways -- And End Sanofi Pasteur MSD (EU Vaccines) Joint Venture?

IF (and the emphasis here is on "if") this is more than a mere rumor, we may well hear a bit about it on the earnings call tomorrow morning.

However, I suspect if serious talks are underway to unwind, they won't be announced until mid-summer 2016. The untangling of Sanofi and Merck operations (and cross-licensing vaccine know-how), could take quite a bit of time -- and one would not want to hastily pre-announce a split -- only to run into snags later. [Here is the last bit of strongly positive news out of the JV -- which we covered a full three years ago, now -- as background.]

On the other hand, to make a bit of a case for the split rumor, it is true that Merck did go it alone, on the Ebola vaccine, and Sanofi has its own complement of vaccines in the EU, which it doesn't share with MSD (US Merck's name over there). Add to this that there's been no JV revenue growth, in seven of the last eight quarters, and it might make more sense for Sanofi to buy its way out of the twenty year old JV. Here's a bit from Bloomberg overnight -- but do go read it all:

. . . .The joint venture, known as Sanofi Pasteur MSD, had revenue of about $330 million in the first six months of last year. It supplies almost half of Europe’s flu vaccines, as well as shots against shingles and the cervical cancer vaccine Gardasil, in Europe. Sales have grown in only one of the past seven quarters. . . .

I'll cover the year end results tomorrow pretty early. Onward!

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